Ability of a school district to issue bonds to finance the acquisition of school buses

SCHOOLS-BONDS-BUSES-FUNDS-Ability of a school district to issue bonds to finance the acquisition of school buses

1.  RCW 28A.530.010 authorizes school districts to issue bonds for certain capital projects.  The acquisition of school buses is not a capital project.  Therefore, the proceeds of bonds issued pursuant to RCW 28A.530.010 cannot be used to acquire school buses.

2.  RCW 28A.530.080 authorizes school districts, under certain circumstances, to issue bonds without a vote of the people.  Proceeds of bonds issued pursuant to RCW 28A.530.080 may be deposited in the transportation vehicle fund.  One purpose of this fund is to acquire school buses.

3.   If the proceeds of bonds issued, without a vote of the people, pursuant to RCW 28A.530.080 are deposited in the transportation vehicle fund, the proceeds may be used to acquire replacement school buses.

                                                                * * * * * * * * * *

                                                                  April 19, 1994

HonorableJudith A. Billings
Superintendent of Public Instruction
Old Capitol Building,MS47200                                                                      
Olympia,WA 98504-7200                                        

                                                                                                Cite as:  AGO 1994 No. 6

Dear Superintendent Billings:

            By letter previously acknowledged, you asked for our opinion on questions we paraphrase as:

            1.         Can school districts finance the acquisition of school buses with bonds issued pursuant to RCW 28A.530.010?

            2.         Can school districts finance the acquisition of school buses with bonds issued without a vote of the people, pursuant to RCW 28A.530.080?

            3.         If the answer to Question 2 is yes, can school districts finance the acquisition of replacement school buses with bonds issued without a vote of the people, pursuant to RCW 28A.530.080?

                                                              BRIEF ANSWERS

            The answer to Question 1 is no.  RCW 28A.530.010 limits the use of bond proceeds to the acquisition of sites, construction of school facilities, making structural changes to school facilities, acquisition of furniture and equipment therefor, and for other capital projects.  The acquisition of school buses is not within the scope of uses permitted under RCW 28A.530.010.  The answer to Question 2 is yes.  RCW 28A.530.080 expressly provides that proceeds from bonds issued thereunder may be deposited in the transportation vehicle fund, which may be used to acquire school buses.  The answer to Question 3 is also yes.  If the proceeds of bonds issued without a vote of the people, pursuant to RCW 28A.530.080, are deposited in the transportation vehicle fund, the proceeds may be used to acquire replacement school buses.

                                                                    ANALYSIS

            Question 1:

            Can school districts finance the acquisition of school buses with bonds issued pursuant to RCW 28A.530.010?

            RCW 28A.530.010 authorizes school districts to borrow money or issue bonds for certain capital projects.  The proceeds of bonds governed by RCW 28A.530.010 must be deposited in the school district's "capital projects fund".  RCW 28A.530.030.  The capital projects fund is one of several common school funds provided for by RCW 28A.320.330 which, in pertinent part, provides:

                        (2)        A capital projects fund shall be established for major capital purposes.  All statutory references to a "building fund" shall mean the capital projects fund so established.  Money to be deposited into the capital projects fund shall include, but not be limited to, bond proceeds, proceeds from excess levies authorized by RCW 84.52.053, state apportionment proceeds as authorized by RCW 28A.150.270, and earnings from capital projects fund investments as authorized by RCW 28A.320.310 and 28A.320.320.

                        Money derived from the sale of bonds, including interest earnings thereof, may only be used for those purposes described in RCW 28A.530.010, except that accrued interest paid for bonds shall be deposited in the debt service fund.

                        Money to be deposited into the capital projects fund shall include but not be limited to rental and lease proceeds as authorized by RCW 28A.335.060, and proceeds from the sale of real property as authorized by RCW 28A.335.130.

(Emphasis added.)

            The capital projects fund includes income from a number of sources.  You have asked about money derived from the sale of bonds.  Bond proceeds deposited in the capital projects fund may only be used for the purposes described in RCW 28A.530.010.  RCW 28A.530.010 provides in part:

                        The board of directors of any school district may borrow money and issue negotiable bonds therefor for the purpose of:

                        (1)        Funding outstanding indebtedness or bonds theretofore issued; or

                        (2)        For the purchase of sites for all buildings, playgrounds, physical education and athletic facilities and structures authorized by law or necessary or proper to carry out the functions of a school district; or

                        (3)        For erecting all buildings authorized by law, including but not limited to those mentioned in subsection (2) of this section immediately above or necessary or proper to carry out the functions of a school district, and providing the necessary furniture, apparatus, or equipment therefor; or

                        (4)        For improving the energy efficiency of school district buildings and/or installing systems and components to utilize renewable and/or inexhaustible energy resources; or

                        (5)        For major and minor structural changes and structural additions to buildings, structures, facilities and sites necessary or proper to carrying out the functions of the school district; or

                        (6)        For any or all of these and other capital purposes.

(Emphasis added.)

            You have asked whether the proceeds of bonds can be used to acquire school buses.  In your letter, you specifically refer to RCW 28A.530.010(3) and (6).  In our judgment, neither of these sections authorize the use of bond proceeds to purchase school buses.

            RCW 28A.530.010(3) pertains to "buildings authorized by law" and "thenecessary furniture, apparatus, or equipment therefor".  (Emphasis added.)  Obviously, buses are not buildings or furniture.  The terms "apparatus"[1]and "equipment",[2]standing alone, could be stretched to include buses.  However, these terms do not stand alone.  RCW 28A.530.010(3) does not authorize purchase of any apparatus and equipment.  It only authorizes "necessary furniture, apparatus, or equipmenttherefor". Id.(emphasis added.)  The terms "necessary" and "therefor" limit the kind of apparatus and equipment authorized under the statute.

            The term "therefor" limits the furniture, apparatus, and equipment to "buildings authorized by law".  We reach this conclusion by applying the last antecedent rule of statutory construction.  Under this rule where "no contrary intention appears in a statute, relative and qualifying words and phrases, both grammatically and legally, refer to the last antecedent". Davisv. Gibbs, 39 Wn.2d 481, 483, 236 P.2d 545 (1951).  AccordCaughey v. Employment Sec. Dep't, 81 Wn.2d 597, 602, 503 P.2d 460 (1972).  In RCW 28A.530.010(3), the last antecedent is "buildings authorized by law".  Thus, the phrase "necessary furniture, apparatus, or equipment therefor" refers to the "buildings authorized by law".

            Another limitation in RCW 28A.530.010(3) is the term "necessary".  Not only must the apparatus and equipment be related to a building authorized by law, the apparatus and equipment must also be "necessary".  In our view, school buses are not necessary apparatus and equipment of a building authorized by law.  Buses transport students to and from school but, they are unrelated to the buildings.  Accordingly, we conclude that RCW 28A.530.010(3) does not authorize the purchase of school buses.[3]

            Your letter also referred to RCW 28A.530.010(6) which authorizes the expenditure of bond proceeds "[f]or any or all of these and other capital purposes".  The question is whether the term "other capital purposes" is broad enough to include school buses.  Again, the answer is no.

            The term "other capital purposes" is not defined.  However, the scope of the term is properly limited through the rule of statutory construction calledejusdem generis.  InCondit v. Lewis Refrigeration Co., 101 Wn.2d 106, 676 P.2d 466 (1984), the court described the rule as follows:

                        Theejusdem generis rule requires that general terms appearing in a statute in connection with specific terms are to be given meaning and effect only to the extent that the general terms suggest items similar to those designated by the specific terms.  In short, specific terms modify or restrict the application of general terms where both are used in sequence.

Id.at 111 (quoting Dean v. McFarland, 81 Wn.2d 215, 221, 500 P.2d 1244 (1972)).

            RCW 28A.530.010 contains a number of specific provisions.  Subsection (2) authorizes the purchase of sites for buildings, playgrounds, athletic facilities, and other authorized and necessary structures.  Subsection (3) authorizes expenditures of bond proceeds to erect buildings authorized by law and to provide the necessary furniture, apparatus, and equipment therefor.  Subsection (4) authorizes expenditures to improve the energy efficiency of school district buildings.  Finally, subsection (5) allows for structural changes and additions to school district buildings, structures, and facilities.  Thus, RCW 28A.530.010(2) through (5) apply to acquiring sites for buildings and structures, as well as erecting and improving those buildings and structures.[4]

            The rule ofejusdem generis requires the term "other capital purposes" be given a similar meaning tied to school facilities.  While school buses may transport pupils to and from school facilities, they are not equipment installed in or attached to those facilities.  School buses, therefore, are not of a nature similar to the specific purposes for which bond proceeds may be used.[5]

            Our conclusion that a school district cannot purchase school buses with the proceeds of bonds deposited in the capital projects fund is supported by other limitations on that fund.  As previously noted, the capital projects fund established by RCW 28A.320.330 has a number of sources in addition to bond proceeds.  The statute imposes the following restrictions on the expenditure of the funds from other sources.  RCW 28A.320.330 provides:           

                        Money legally deposited into the capital projects fund from other sources may be used for the purposes described in RCW 28A.530.010, and for the purposes of:

                        (a)        Major renovation, including the replacement of facilities and systems where periodical repairs are no longer economical.  Major renovation and replacement shall include, but shall not be limited to, roofing, heating and ventilating systems, floor covering, and electrical systems.

                        (b)        Renovation and rehabilitation of playfields, athletic fields, and other district real property.

                        (c)        The conduct of preliminary energy audits and energy audits of school district buildings.  For the purpose of this section:

                        (i)         "Preliminary energy audits" means a determination of the energy consumption characteristics of a building, including the size, type, rate of energy consumption, and major energy using systems of the building.

                        (ii)        "Energy audit" means a survey of a building or complex which identifies the type, size, energy use level, and major energy using systems; which determines appropriate energy conservation maintenance or operating procedures and assesses any need for the acquisition and installation of energy conservation measures, including solar energy and renewable resource measures.

                        (iii)       "Energy capital improvement" means the installation, or modification of the installation, of energy conservation measures in a building which measures are primarily intended to reduce energy consumption or allow the use of an alternative energy source.

                        (d)        Those energy capital improvements which are identified as being cost-effective in the audits authorized by this section.

                        (e)        Purchase or installation of additional major items of equipment and furniture:  PROVIDED,That vehicles shall not be purchased with capital projects fund money.

(Emphasis added.)

            Thus, money deposited into the capital projects fund from other sources may be used for the purposes described in RCW 28A.530.010, as well as for the additional purposes listed.  RCW 28A.320.330(2)(e) authorizes the purchase of major items of equipment, but specifically excludes vehicles.  Accordingly, none of the money deposited in the capital projects fund, regardless of its source, may be used to purchase vehicles.

             Our conclusion that the capital projects fund cannot be used to purchase vehicles, including school buses, is further supported by the fact that the Legislature has specifically addressed the question of pupil transportation in chapter 28A.160 RCW.  This chapter provides detailed direction on the acquisition and use of school buses.  RCW 28A.160.130 establishes a vehicle transportation fund.  RCW 28A.160.130 provides, in pertinent part:

                        (1)        There is created a fund on deposit with each county treasurer for each school district of the county, which shall be known as the transportation vehicle fund. . . .

                       . . .

                        (2)        Funds in the transportation vehicle fund may be used for the following purposes:

                        (a)        Purchase of pupil transportation vehicles pursuant to RCW 28A.160.200 and 28A.150.280;

                        (b)        Payment of conditional sales contracts as authorized in RCW 28A.335.200 or payment of obligations authorized in RCW 28A.530.080, entered into or issued for the purpose of pupil transportation vehicles;

                        (c)        Major repairs to pupil transportation vehicles.

(Emphasis added.)

            Thus, the Legislature has addressed the acquisition of school buses by establishing the transportation vehicle fund.  This fund has a number of sources.  However, the proceeds of bonds issued pursuant to RCW 28A.530.010 cannot be deposited in the transportation vehicle fund because RCW 28A.530.030 requires that those bond proceeds be deposited in the capital projects fund.

            In our judgment, the Legislature has created an orderly process for funding various school needs.  It has created a capital projects fund for capital projects and a transportation vehicle fund for student transportation.   The proceeds of bonds issued pursuant to RCW 28A.530.010 are limited to capital projects which does not include school buses.[6]  Accordingly, the answer to Question 1 is no.

            Question 2:

            Can school districts finance the acquisition of school buses with bonds issued, without a vote of the people, pursuant to RCW 28A.530.080?

            The statute in question, RCW 28A.530.080, provides:

                        In addition to the authority granted under RCW 28A.530.010, a school district may contract indebtedness for the purpose of purchasing any real orpersonal property, or property rights, in connection with the exercise of any powers or duties which it is now or hereafter authorized to exercise, and issue bonds, notes, or other evidences of indebtedness therefor without a vote of the qualified electors of the district, subject to the limitations on indebtedness set forth in RCW 39.36.020(3).  Such bonds, notes, or other evidences of indebtedness shall be issued and sold in accordance with chapter 39.46 RCW, andthe proceeds thereof shall be deposited in the capital projects fund,the transportation vehicle fund, or the general fund, as applicable.

(Emphasis added.)

            Unlike the proceeds of bonds issued pursuant to RCW 28A.530.010 which must be deposited in the capital projects fund, the proceeds of bonds issued pursuant to RCW 28A.530.080 may be deposited in the transportation vehicle fund.  As we observed in our analysis of Question 1, one of the purposes of the transportation vehicle fund is to fund the purchase of school buses.  RCW 28A.160.130(2)(a), (b).  It is certain, therefore, that the proceeds of bonds issued pursuant to RCW 28A.530.080, which are deposited in the transportation vehicle fund, may be used to purchase pupil transportation vehicles, including school buses.  Therefore, the answer to Question 2 is yes.

            Question 3:

            If the answer to Question 2 is yes, can school districts finance the acquisition of replacement school buses with bonds issued, without a vote of the people, pursuant to RCW 28A.530.080?

            There is nothing in either RCW 28A.530.080 or chapter 28A.160 RCW that prohibits using transportation vehicle fund monies to purchase replacement school buses.  Indeed, chapter 28A.160 RCW appears to contemplate the replacement of buses at the end of their useful life.  RCW 28A.160.200 provides that the Superintendent of Public Instruction shall make determinations regarding vehicle acquisition.  RCW 28A.160.200(3) provides that to "the extent possible, districts shall operate vehicles acquired under this section not less than the number of years or useful lifetime now, or hereafter, assigned to the class of vehicles by the superintendent".  The implication of this section is that the vehicles may be replaced when their useful life is at an end.

            The only general restriction on the acquisition of replacement equipment is found in article 7, section 2 of the Washington Constitution.  Article 7, section 2 establishes a limit on property taxes which states that "the aggregate of all tax levies upon real and personal property by the state and all taxing districts now existing or hereafter created, shall not in any year exceed one per centum of the true and fair value of such property in money".   Article 7, section 2 goes on to list the circumstances under which the one percent property tax limit may be exceeded.  Article 7, section 2 provides in part:

            Such aggregate limitation or any specific limitation imposed by law in conformity therewith may be exceeded only . . .

                        (b)        By any taxing district otherwise authorized by law to issue general obligation bonds for capital purposes, for the sole purpose of making the required payments of principal and interest on general obligationbonds issued solely for capital purposes, other than the replacement of equipment, when authorized so to do by majority of at least three-fifths of the electors thereof voting on the proposition to issue such bonds[.]

(Emphasis added.)  Thus, the restriction on replacement equipment only applies to bonds issued solely for capital purposes, pursuant to a vote of the people to exceed the one percent limit imposed by article 7, section 2.[7]

            This provision does not apply to bonds issued pursuant to RCW 28A.530.080.  This is because RCW 28A.530.080 provides that a district may issue bonds "without a vote of the qualified electors of the district, subject to the limitations on indebtedness set forth in RCW 39.36.020(3)".  (Emphasis added.)  The limitation on debts in RCW 39.36.020(3) provides:

                        School districts are limited to an indebtedness amount not exceeding three-eighths of one percent of the value of the taxable property in such districtwithout the assent of three-fifths of the voters therein voting at an election held for that purpose.  In cases requiring such assent school districts are limited to a total indebtedness of two and one-half percent of the value of the taxable property therein.

(Emphasis added.)

            RCW 39.36.020(3)[8]establishes two classes of indebtedness.  Class A indebtedness, which limits debt to an amount not exceeding three-eighths of one percent of the value of taxable property in the district, may be incurred without a vote of the people.  Class B indebtedness, which exceeds the three-eighths of one percent limit, must be authorized by a vote of the people.  See AGO 65-66 No. 123, at 4.  When a vote of the people is required for Class B indebtedness, the ballot proposition must specify whether a levy in excess of the one percent limitation in article 7, section 2 is required.  If so, the ballot proposition must include an authorization for such excess levy.  RCW 39.36.050.

            RCW 28A.530.080 authorizes the issuance of Class A indebtedness which does not require a vote of the people.[9]  The restriction on replacement equipment only applies if bonds are issued pursuant to a vote of the people to exceed the one percent levy limitation in article 7, section 2.  Since the bonds in RCW 28A.530.080 are Class A indebtedness and issued without a vote of the people, the restriction regarding replacement equipment in article 7, section 2 does not apply.  Accordingly, the answer to Question 3 is yes.

            We trust our opinion will be of assistance to you.

                                                                        Very truly yours,

                                                                        CHRISTINE O. GREGOIRE
                                                                        Attorney General

                                                                        WILLIAM B. COLLINS
                                                                        Senior Assistant Attorney General

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